No real sign of recovery was apparent in dismal job numbers released Friday but, while they’ll certainly leave a bitter taste for some who read economic tea leaves, there was the small consolation that the statistics could have been worse.
Bucking predictions that the recession may have officially ended in July, Statistics Canada reported that Canada’s labour market shed another 45,000 jobs as more people struggled to find work. It was a terrible month for the tourism sector and youth employment fell sharply from one of the worst summer job markets in decades.
The unemployment rate stayed at 8.6 per cent as discouraged workers appeared to leave the labour market and were not counted in the monthly tally from Statistics Canada.
The news held little surprise for Finance Minister Jim Flaherty, who has sounded a more pessimistic note than many — including Bank of Canada governor Mark Carney — who have claimed to see signs of an economy on the mend.
“These are difficult times. It’s going to be a difficult year. I’ve been saying that, to sort of, calm the euphoria about, you know, ’We’re out of a recession,”’ Flaherty told CTV News.
“We are stabilized, and there are some good signs. But it’s still the recession and we still have to work our way out of it.”
Though the national unemployment rate was unchanged, one note of concern was that full-time employment and private sector jobs — the two most reliable indicators of labour market strength — both continued their downward trajectory.
“We expected continuing increases in unemployment and we’re seeing that. The unemployment rate will lag the recovery of the economy,” Flaherty said.
“The economy has stabilized but some people are still losing their jobs.”
The agency reported there were 29,100 fewer full-time workers in July. The private sector also to shed jobs, dropping another 75,000.
“While a jobless recovery is possible, a job- destroying recovery isn’t, since even if productivity gains allow it for a while, it leaves the household sector without the spending power to sustain it,” wrote CIBC chief economist Avery Shenfeld.
“All told, these were much weaker numbers than anticipated.”
Carney recently said the summer quarter should produce growth of 1.3 per cent, the first quarterly economic expansion in Canada since last fall. Some economists have said there are many indicators that show the spring-summer quarter would hold the first signs of improvement after nine months of economic battering.
Recent corporate earnings have not entirely supported that thesis, nor have economics reports.
Stock market heavyweights such as Bell Canada (TSX:BCE), Telus (TSX:T), Manulife Financial (TSX:MFC), Catalyst Paper (TSX:CTL) and others have reported that the recession continued to act as an anchor to their bottom lines.
“No one said it was going to be a smooth recovery, and especially not for employment,” said BMO Capital Markets Economist Doug Porter.
“If there is any positive spin here for the broader economy, it’s that the job losses were almost entirely concentrated among summer students (though try telling your teenager that’s good news).”
While “the underlying picture still looks quite soft and there’s little sign here that the economy is quickly turning the corner” that doesn’t mean a recovery isn’t going to come in the months ahead, Porter said.
“Fortunately, there are plenty of other areas improving, most notably home sales, auto sales, and overall financial conditions. We’re still expecting positive economic growth in the third quarter, but these dataa cast doubt on the strength of that GDP rebound.”
TD Bank economist Diana Petramala said job losses will grow throughout the year before recovery in 2010.
”Even though the Canadian economy is likely to resume positive growth sometime in the third quarter, we are likely to continue to see the unemployment rate climb for up to six months after the recession has come to a close,“ she said in a report.”
”First comes growth, and then comes the hiring. Employment not only tends to lag economic growth during recoveries. it tends to recover at a much slower pace.“”
The summer job market continued to cool in July as the student jobless rate rose to 20.9 per cent — a 7.1 percentage point jump from July 2008 and the highest student unemployment rate for the month on record.